crypto market capitalization crossed the $2 trillion mark…this is insane !

Amongst the various #crypto statistics making headlines everyday, this may not seem that relevant. But this is insane ! This market cap is comparable to the size of the biggest economies of the world, even though it is floating around $1.6 trillion in early 2023. Let me explain, and I understand the risk that I am probably oversimplifying this. 

* A popular metric for representing the size of a country’s economy today is GDP. Gross domestic product is the monetary value of all finished goods and services made within a country during a specific period. Nominal GDP is calculated with current prices without accounting for inflation.

* The world’s largest economies today are #USA and #china with nominal GDP of $22.66 trillion and $16.64 trillion each. Then there is Japan, Germany, UK, India, Italy etc. all next on the list of the biggest economies in the world.

* Important thing to note is that the economies of India, UK, Italy, Canada, South Korea are all around the $2 Trillion size, so market capitalization of cryptocurrencies are now comparable to biggest economies of world.

* These economies are growing at an average rate of 3% to 5% annually, where as the #crypto market is growing at unprecedented rates.

So how does the various types of digital currencies contribute to this market size ? Well Money is of only two types ; regulated and everything else.

In my various conversations with industry peers, I have been trying to find a way to segregate the types of currencies or “money” that exists today. As I learn and find out more, the definition of my segregation changes.

* Based on who owns the issuance of “money” I started with “private money” and “public money”. Fiat being public and everything else is private.

* Then based on encryption. So there are crypto currencies and then there are other digital currencies which may not be really currencies or encrypted but still represent a form of money. Example wallets as store of value.

* Based on the type of platform they are issued on. Tokenized or account based.

* Digital currencies issued by the central bank and all others. CBDC and everything else; crypto, stablecoins, private bank coins etc. CBDC is not very developed yet, and doest add to the market capitalization of digital currencies.

As I understand more, the only relevant segregation of money, is based on whether it is regulated or not.It seems like for the near future, both regulated and unregulated money will co-exist.

This is one of the most polarising topics in the world today, but #decentralized #money is going places and the world will never be the same again.

 

 

Ajay Singh Pundir

Over the last decade and half, Ajay has acquired experience across ‘Business Strategy’, ‘Sales management’, Business Development’, ‘Solution Consulting’ and ‘Research and Development’. He has been leading interactions with financial institutions, fintechs, software vendors and services organizations globally, acquiring crucial global exposure of varied financial technology markets with a focus on payments but not limited to it.

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